Keystone Pipeline, Jobs, and Confusion

Perhaps “haste makes waste” explains the jumble of contradictory statements coming from President Trump with regard to the Keystone XL and Dakota Access Pipeline projects. Or maybe not?? Trump gives green light to Dakota Access Keystone XL oil pipelines. Trump’s trade and jobs rhetoric continues to alarm free market conservatives as well as our trading partners abroad (see the comments coming from a bewildered Germany wondering how to best protect their interests as Trump pursues what he—mistakenly—considered America’s interests).

The pipelines will save jobs (yes save jobs), improve safety, and reduce environmental risks compared with the existing alternatives of rail and trucking. Obama’s State Department reviews, which cleared the Keystone XL project multiple times, concluded in its final review that the Canadian oil in question was coming out of the ground with or without the Keystone XL pipeline and thus there would be no significant impact on greenhouse gas emissions from the pipeline. https://keystonepipeline-xl.state.gov/documents/organization/221135.pdf

The same is true for the Dakota Access pipeline, the final 1,100 feet of which (of the 1,171 mile project) have been stopped because of objections by the Standing Rock Sioux tribe that it would “disturb sacred burial and archaeological sites.” WaPo.

On Tuesday, Trump said: “From now on, we’re going to be making pipeline in the United States. We build the pipelines, we want to build the pipe. We’re going to put a lot of workers, a lot of skilled workers, back to work. We will build our own pipeline, we will build our own pipes, like we used to in the old days.” WaPo

I am increasingly inclined to think that Trump’s blatant misrepresentations of the impact of his “Buy American, hire American” mantra is sinister demagoguery. TransCanada, the Canadian project owner had already planned to buy 65% of the steel pipe from U.S. manufacturers as a purely business decision. Replacing the remaining 35% with American made pipes would increase the cost of the project. It would also redeploy American workers from their current, presumable more productive, employment to make these pipes. It is hard to see what Trump doesn’t get about efficiency and productivity as a source of our wealth. If he insists on doing it “like we used to in the old days,” he will make us poorer as “in the old days.”

“Opponents of the pipeline dismissed the job numbers and economic impacts, arguing that pipelines will create only “a handful” of permanent jobs.

“But the fact that pipelines only have a handful of permanent workers simply conveys how remarkably efficient pipelines are. The high output of labor generates value and wealth and frees up Americans to be more productive elsewhere in the economy.” http://dailysignal.com/2017/01/24/trumps-pipeline-approvals-are-a-win-for-the-economy-and-environment/?utm_source=TDS_Email&utm_medium=email&utm_campaign=MorningBell&mkt_tok=eyJpIjoiT0RJeFlqaGpNamt3TkdOayIsInQiOiJTSnpZZExnVUdLOThQdW5ESnNPNDlIUHByWXFXNSs3bEFDa0VFOHVCbnhTOUtnbTBMWnd6MEkxTkdhRHpCVjU5a0JhQ2EraVZWTVVOcXlJVzVpMkVQVm9OWkJcL29VOEpkdG93RllJeldNNVBpem9KbHlPTWlOOFRJSkVEM3FyR1QifQ%3D%3D

 

 

About wcoats

Dr. Warren L. Coats specializes in advising central banks on monetary policy, and in the development of their capacity to formulate and implement monetary policy. He is retired from the International Monetary Fund, where, as Assistant Director of the Monetary and Financial Systems Department, he led missions to over twenty countries. Before then, he served as Visiting Economist to the Board of Governors of the Federal Reserve System, and to the World Bank, and was Assistant Prof of Economics at the Univ. of Virginia from 1970-75. Most recently he was Senior Monetary Policy Advisor to the Central Bank of Iraq; an IMF consultant to the central banks of Afghanistan, Kenya and Zimbabwe; and a Deloitte/USAID advisor to the Government of South Sudan. He is currently a member of the Editorial Board of the Cayman Financial Review and until the end of 2013 was a member of the IMF program team for Afghanistan. His most recent book is entitled "One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina."
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One Response to Keystone Pipeline, Jobs, and Confusion

  1. James Roumasset says:

    Warren,
    Keep writing about good projects saving jobs and stupid projects creating them. Economic growth requires increased productivity, which means LESS JOBS per unit of output. If more jobs is the objective, ban domestic as well as international trade. We’ll all become farmers in order to survive and life will be nasty, brutish, and short.
    So far Trump’s “economic team” consists of one anti-trade economist and a bunch of businessmen, but hopefully your message will eventually get through to someone.
    Jim

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